How an Obscure 1920 U.S. Law is Crippling Puerto Rico’s Recovery

How an Obscure 1920 U.S. Law is Crippling Puerto Rico’s Recovery

A damaged Puerto Rican national flag spray painted hangs from the facade of a business in San Juan after Hurricane Maria. Puerto Rico has so far been concentrated largely in San Juan, and many outside the capital say they've received little or no help. (Credit: Ramon Espinosa/AP Photo)

Website Name

Year Published

Title

URL

Access Date

December 13, 2017

Publisher

A+E Networks

Sometimes laws are passed with the stated goal of improving the whole of the United States, when really they’re just aimed at addressing one tiny issue. Such is the case with the Merchant Marine Act of 1920, which received renewed scrutiny in September 2017 after Hurricane Maria devastated Puerto Rico.

Also known as the Jones Act (but not to be confused with the other Jones Acts), this law stipulates that all domestic transfers between U.S. ports must be made by ships that are American-made, owned, and operated. Although Puerto Rico is more than 2,000 miles from the mainland United States, it has to receive all of its goods via American ships, instead of cheaper and often closer foreign ships.

As a result of the Jones Act, food costs roughly twice as much in Puerto Rico as it does on the mainland, and cars cost about 40 percent more, according to CNN. Puerto Rico’s median household income is $19,000, compared to $59,000 nationally.

Back in 1920, “the stated purpose [of the act] was that we needed a strong Navy and a strong military, and one way to get that was to have a strong merchant marine,” says Thomas Grennes, an economic professor emeritus at North Carolina State University who has written about the act. But in reality, Senator Wesley Livsey Jones (R-WA) introduced the bill to halt the use of Canadian ships between Alaska and his home state of Washington.

By that time, the U.S. has already lost the competitive edge in shipbuilding that it had held in the 1800s, and merchant marine lobbying groups were eager to edge out foreign competition; the industry has continued to lobby to keep the act ever since. The law doesn’t apply to international exports or imports between U.S. and foreign ports (and in fact, most ships used for those purposes are foreign because they are cheaper).

Grennes says that the exclusive use of American ships for domestic transfers adds extra costs to residents on the U.S. mainland. But the real weight of this cost is mostly felt by Hawaii, Alaska, and Puerto Rico, which don’t have the option of transporting products by land from other territories or states. These regions have tried to gain exemption from the Jones Act in the past; in Puerto Rico especially, it’s exacerbated an already huge debt crisis.

View of the port of San Juan at the beginning of the 20th century. (Credit: KEYSTONE-FRANCE/Gamma-Rapho via Getty Images)

Recently, the Jones Act was thrown into the national spotlight by a series of hurricanes in the Gulf Coast. After Hurricanes Harvey and Irma, the U.S. government suspended the Jones Act so that aid could quickly reach affected parts of Texas and Florida. Yet in the wake of Hurricane Maria, the government did not waive the act, prompting a New York Times op-ed that called on Congress to suspend the Jones Act for Puerto Rico. In a letter to acting Homeland Security Secretary Elaine Duke, Senator John McCain (R-AZ) pleaded to suspend the act in Puerto Rico, and also argued that it was time “finally repeal the outdated and protectionist Jones Act” once and for all.

“On the specific issue of these national disasters, the Jones Act really is an obstacle,” Grennes says. By requiring that only certain kinds of ships, rather than the closest ships, can serve areas affected by a natural disaster, “it slows things down.”

Grennes thinks that one possible solution would be to create an automatic waiver, so that when the President declares a natural disaster, the affected area would be automatically exempt from the act. This would get rid of the bureaucratic protocol needed to suspend it, which ends up wasting precious time for people who need immediate help.

But like McCain, Grennes also says that the Jones Act should probably be done away with, at least for Hawaii, Alaska, and Puerto Rico. He says the overall effect of the law has been to benefit the shipping and merchant marine industries at the expense of the rest of Americans.

“I think in general, the Jones Act for almost 100 years has been a mistake,” he says, because it’s “hurting Americans more than it’s helped anybody.”

Oops, there's a problem.

At this time we are unable to complete your subscription.This email address has been previously opted out from receiving any emails from A+E Networks. If you changed your mind, please contact us and indicate that you would like to subscribe to HISTORY emails.

You have already subscribed to this list.

If you completed your subscription and still have not received an email, please contact us.

Oops, there's a problem.

At this time we are unable to complete your subscription.This email address has been previously opted out from receiving any emails from A+E Networks. If you changed your mind, please contact us and indicate that you would like to subscribe to HISTORY emails.

You're signed up!

You will soon receive an email with a direct link to your profile, where you can update your preferences.If you do not receive this email, please contact us.

Oops, there's a problem.

At this time we are unable to complete your subscription.This email address has been previously opted out from receiving any emails from A+E Networks. If you changed your mind, please contact us and indicate that you would like to subscribe to HISTORY emails.

You have already subscribed to this list.

If you completed your subscription and still have not received an email, please contact us.

Oops, there's a problem.

At this time we are unable to complete your subscription.This email address has been previously opted out from receiving any emails from A+E Networks. If you changed your mind, please contact us and indicate that you would like to subscribe to HISTORY emails.

You're signed up!

You will soon receive an email with a direct link to your profile, where you can update your preferences.If you do not receive this email, please contact us.